All Forum Posts by: Mike S.

You will need to register your LLC in the state where the second property is located. If not, you can't start an eviction, respond to legal complaint, etc...

The price to foreign register an out of state LLC in another state is often the same price as having a separate LLC.

As a separate LLC will offer you better asset protection (your other property will not be at risk when the first one is attacked), and the cost is the same, why not using two LLC instead?

Ideally, you can create a WY holding LLC that will offer you charging order protection and anonymity. The WY LLC will then in turn own each state single member, member managed, LLC for each property.

LLC will never protect your asset against your crimes or fraudulent actions.
However, it will limit your amount at risk in any tort civil suits if you maintain them properly. It also often make settlement to the insurance limit easier due to the difficulty to pierce its veil and reach other asset.

In Florida look also at the Lady Bird Deed (or enhanced life estate). That is a deed that basically let you put on paper who will inherit the property automatically at your death without probate.

During your life, you can still do as you wish with the property (sell, refinance, etc). You keep your homestead and asset protection.

So you can make a Lady Bird Deed to your kids or even to your living trust if you want a more granular distribution method to you heirs. 

Some conventional mortgage clearly accept transfer to an LLC where you are the member without triggering the due on sale clause. Some will not.
You may want to look at using a land trust. If done properly that could avoid the due on sale clause.

You first deed your property to a land trust where you are still the beneficiary. This transfer will not trigger the due on sale clause per the Garn St Germain act. Make sure that you change all your insurance insured name to the land trust.
In a second time, you assign the beneficial interest of the land trust to your LLC. As this transfer is not recorded, your bank will not know about it. In case at some point you need to show who the beneficiary is, you can always reassign to you for a few days and then back to the LLC.

In my view Index Universal Life insurance are better suited than whole life when used in conjunction with real estate investment. Personally I am using exclusively IUL for that.

Of course you need a properly set up Whole Life or IUL for maximum cash value.

On the long run, a IUL will have a better IRR than a Whole Life. However the IUL will have much more volatility and some years you can have a 0% gain while other years you can have double digits gains. If you are using the infinite banking concept for regular consumption purchase, you need a policy with steady return as you can not absorb the volatility, so a Whole Life is much more suited for that than an IUL. When you are using high cash value permanent life insurance collateral for investment purpose like real estate, the volatility can be absorbed much easier as you are producing cash flow with your investment. The gain of your life insurance is just the ice on the cake, so you want to maximize the long term IRR. The long term IRR of a properly set up Whole Life policy is in the 3 to 5% range, while you can expect 5 to 8% IRR with an IUL.

A mortgage life insurance is a kind of term life insurance that will pay the remaining balance of your mortgage if you die before the end of the mortgage.

The amount of death benefit decreases every month as your mortgage balance decrease. The amount of premium you pay monthly could be averaged over the total duration of your mortgage or can decrease based on the amount left at risk.

Like most term life insurance, they are usually cheap (if you are reasonably young and have no preexisting medical issue). They rarely pay out (less than 2%) as you are expected to live past its term.

Term life insurance has its place to cover your family if you die early. It is often used to replace your salary for a spouse or to pay for your children expenses until they are old enough to work.

Another kind of insurance is permanent life insurance (the most common today are Whole Life and Index Universal Life). As these insurance are covering your for the totality of your life, they will have to pay eventually a death benefit. So for the life insurance company, compared to a term product where they only pay out 2% of the time, they now have to pay out 100% of the time. It make these products much more expensive to purchase, but on the other end you are sure that your family will benefit from it.

So depending on your financial profile and your needs, it may be advisable in some case not to use any term products but only permanent life insurance instead, or a combination of both.

Instead of foreign registering an LLC in another state, it is often the same price to open a new LLC in that state. Have that LLC owned by your holding LLC. It adds some better protection if your holding LLC is in a strong charging order protection state, and by having different LLC you are limiting your liability exposure to only the content of that LLC. As these local LLC are disregarded for tax purposes, it does not increase your tax reporting burden.

My understanding is that the trust is totally disregarded for tax purposes and tax liabilities are on the beneficiary.

Your local out of CA properties are owned by separate local LLCs and all these local LLCs are owned by the WY LLC. The WY LLC is owned by the WST and you are the trustee and beneficiary of the WST, living in CA.

So if your WY holding LLC is disregarded for tax purposes (as it should with only one member being the WST), you as the beneficiary of the trust is reporting its income on your tax return.

However, as you are only the beneficiary of the WST that is exempt from the CA franchise fee, and as none of the LLC are doing business in CA and you are not directly involved with them, they are also exempt from the CA franchise fee.